Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
It indicates that all resources in the economy are being utilized efficiently.
B
It guarantees that there will be no unemployment in the economy.
C
It demonstrates the importance of external factors in influencing aggregate demand.
D
It reflects a situation where aggregate demand equals long-run aggregate supply.
E
It suggests that monetary policy has no effect on maintaining economic stability.
Understanding the Answer
Let's break down why this is correct
Answer
Full Employment Equilibrium means that all people who want to work and are able to work can find jobs. This does not mean that everyone is employed at the same time, but rather that the unemployment rate is low and mostly consists of people transitioning between jobs. When an economy reaches this state, it indicates that resources are being used efficiently, leading to stable prices and economic growth. For example, if a country has a low unemployment rate, it suggests that businesses are hiring and producing goods, which can help improve the overall standard of living. In this situation, the economy is balanced, and people can find work without much difficulty.
Detailed Explanation
Full Employment Equilibrium does not mean no unemployment or perfect resource use. Other options are incorrect because Some might think full employment means all resources are used perfectly; Many believe full employment means zero unemployment.
Key Concepts
Full Employment Equilibrium
Aggregate Demand and Supply
Monetary Policy
Topic
Full Employment Equilibrium
Difficulty
easy level question
Cognitive Level
understand
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